Author information:
Gergely Manasses: Magyar Nemzeti Bank, Risk Analyst. E-mail: manassesg@mnb.hu
Éva Paulik: Magyar Nemzeti Bank, Risk Analyst. E-mail: paulike@mnb.hu
Attila Tapaszti: Magyar Nemzeti Bank, Principal Portfolio Manager. E-mail: tapasztia@mnb.hu
Abstract:
The measurement of the environmental impact of green bonds, its reliability and the publication of measurement results are crucial for the transparent functioning of the market and supporting investor decisions. However, this segment of the financial markets is still at an early stage of maturity, and the lack of adequate data and methodologies is a common problem that can only be solved by the development of single-market best practices and regulations. The essay reviews the trends, characteristics and current regulation of existing green bond impact reports and describes the challenges of evaluating impact reports, based on the literature and our own practical experience. In our view, the market has already moved past its “virtue-signalling PR” stage, but there is still a long way to go before impact data become as standardised as traditional financial data.
Cite as (APA):
Manasses, G., Paulik, É., & Tapaszti, A. (2022). Green Bond Impact Report as an Essential Next Step in Market Development. Financial and Economic Review, 21(4), 180–204. https://doi.org/10.33893/FER.21.4.180
Column:
Essay
Journal of Economic Literature (JEL) codes:
G11, O13, O44
Keywords:
green bond impact reports, quantification of environmental impacts, impact investing
References:
Alogoskoufis, S. – Carbone, S. – Coussens, W. – Fahr, S. – Giuzio, M. – Kuik, F. – Parisi, L. – Salakhova, D. – Spaggiari, M. (2021): Climate-related risks to financial stability. European Central Bank: Financial Stability Review, May 2021. https://www.ecb.europa.eu/pub/financial-stability/fsr/special/html/ecb.fsrart202105_02~d05518fc6b.en.html. Downloaded: 24 October 2022.
Aszódi, A. – Adorján, L. – Biró, B. – Dobos, Á.Cs. – Illés, G. – Tóth, N.K. – Zagyi, D. – Zsiborás, Z.T. (2021): Comparative analysis of national energy strategies of 19 European countries in light of the green deal’s objectives. ScienceDirect, Energy Conversion and Management: X, 12(December), 100136. https://doi.org/10.1016/j.ecmx.2021.100136
Baranyai, E. – Banai, Á. (2022): Feeling the Heat: Mortgage Lending and Central Bank Options. Financial and Economic Review, 21(1): 5–31. https://doi.org/10.33893/FER.21.1.5
Bécsi, A. – Varga, M. – Lóga, M. – Kolozsi, P.P. (2022): First steps – the nascent green bond ecosystem in Hungary. Cognitive Sustainability, 1(1). https://doi.org/10.55343/cogsust.11
Carney, M. (2021): A new sustainable financial system can secure a net zero future for the world. Finance & Development, IMF, September, pp. 20–22. https://www.imf.org/external/pubs/ft/fandd/2021/09/pdf/mark-carney-net-zero-climate-change.pdf. Downloaded: 28 April 2022.
CBI (2021): Post-issuance reporting in the green bond market. https://www.climatebonds.net/files/reports/cbi_post_issuance_2021_02g.pdf. Downloaded: 2 May 2022.
CBI (2022a): $500bn Green Issuance 2021: social and sustainable acceleration: Annual green $1tn in sight: Market expansion forecasts for 2022 and 2025. https://www.climatebonds.net/2022/01/500bn-green-issuance-2021-social-and-sustainable-acceleration-annual-green-1tn-sight-market. Downloaded: 12 September 2022.
CBI (2022b): Climate Bond Standard V3.0. https://www.climatebonds.net/climate-bonds-standard-v3 Downloaded: 20 May 2022
CBI (2022c): Green Bond Pricing in the Primary Market: January – June 2022. https://www.climatebonds.net/files/reports/cbi_pricing_h1_2022_02g.pdf. Downloaded: 25 October 2022.
Climate Policy Institute (2021): Mi az: zöld, magyar és sikersztori? Zöld Magyar Államkötvény. (What is it: green, Hungarian and a success story? The Green Hungarian Government Bond). https://klimapolitikaiintezet.hu. https://klimapolitikaiintezet.hu/cikk/mi-az-zold-magyar-es-sikersztori-zold-magyar-allamkotveny. Downloaded: 12 September 2022.
Delmas, M.A. – Burbano, V.C. (2011): The Drivers of Greenwashing. California Management Review, 54(1): 64–87. https://doi.org/10.1525/cmr.2011.54.1.64
EC (2019): European Green Bond Standard. https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/european-green-bond-standard_en. Downloaded: 10 May 2022.
Elek, F. – Tapaszti, A. – Windisch, K. (2021): MNB green bond portfolio – impact equating the carbon footprint of a town. Special article, Magyar Nemzeti Bank. https://www.mnb.hu/letoltes/mnb-impact-reporting-article-february-2021.pdf. Downloaded: 21 April 2022.
Environmental Finance (2021): Green Bond Funds – Impact Reporting Practices. https://www.environmental-finance.com/assets/files/reports/green-bond-funds-impact-reporting-practices-2021.pdf. Downloaded: 4 May 2022.
EU (2020): Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088. https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A32020R0852. Downloaded: 3 May 2022.
EU (2022): European green bonds – A standard for Europe, open to the world. https://www.europarl.europa.eu/RegData/etudes/BRIE/2022/698870/EPRS_BRI(2022)698870_EN.pdf. Downloaded: 3 May 2022.
ICMA (2020): Bond Market Size. https://www.icmagroup.org/market-practice-and-regulatory-policy/secondary-markets/bond-market-size/. Downloaded: 12 September 2022.
ICMA (2021a): The Green Bond Principles. Voluntary Process Guidelines for Issuing Green Bonds. https://www.icmagroup.org/sustainable-finance/the-principles-guidelines-and-handbooks/green-bond-principles-gbp/. Downloaded: 29 April 2022.
ICMA (2021b): Handbook Harmonised Framework for Impact Reporting. https://www.icmagroup.org/assets/documents/Sustainable-finance/2021-updates/Handbook-Harmonised-Framework-for-Impact-Reporting-June-2021-100621.pdf. Downloaded: 29 April 2022.
IIF (2022): Institute of International Finance: ESG Flows and Markets: Q1 2022 Chartbook. https://www.iif.com/Portals/0/Files/content/1_IIF ESG Flows and Markets_April 2022_vf.pdf. Downloaded: 13 May 2022.
Kolozsi, P.P. – Ladányi, S. – Straubinger, A. (2022): Measuring the Climate Risk Exposure of Financial Assets - Methodological Challenges and Central Bank Practices. Financial and Economic Review, 21(1): 113–140. https://doi.org/10.33893/FER.21.1.113
Maltais, A. – Nykvist, B. (2020): Understanding the role of green bonds in advancing sustainability, Journal of Sustainable Finance & Investment. https://doi.org/10.1080/20430795.2020.1724864
Matolcsy, Gy. (2022): The Appearance of Economic, Social, Financial and Environmental Sustainability Aspects in the Practices of the National Bank of Hungary. Public Finance Quarterly, 2022(3): 315–334. https://doi.org/10.35551/PFQ_2022_3_1
Mihálovits, Zs. – Paulik, É. (2022): Are green covered bond impact reports reliable? Cognitive Sustainability, 1(3). https://doi.org/10.55343/cogsust.30
Mihálovits, Zs. – Tapaszti, A. (2018): Green Bond, the Financial Instrument that Supports Sustainable Development. Public Finance Quarterly, 18(3): 312–327. https://www.penzugyiszemle.hu/upload/pdf/penzugyi_szemle_angol/volume_63_2018_3/A_Mihalovits-Tapaszti_2018_3.pdf
MNB (2022a): Zöld Kötvény Kibocsátási Útmutató (Guidelines on Issuance of Green Bonds). https://www.mnb.hu/letoltes/mnb-zold-kotveny-utmutato.pdf. Downloaded: 13 April 2022.
MNB (2022b): The MNB’s climate change finance report. https://www.mnb.hu/letoltes/tcfd-jelente-s-2022-en.pdf. Downloaded: 20 April 2022
NPSI (2020): Position Paper on Green Bonds Impact Reporting. https://www.kuntarahoitus.fi/app/uploads/sites/2/2020/02/NPSI_Position_paper_2020_final.pdf. Downloaded: 12 May 2022.
OECD (2020): Sustainable Infrastructure Policy Initiative. https://www.oecd.org/finance/Sustainable-Infrastructure-Policy-Initiative.pdf. Downloaded: 8 April 2022.
OTP-J (2021): OTP Jelzálogbank: Zöld jelzáloglevél jelentés 2021 (Green Mortgage Bond Report). https://www.otpbank.hu/OTP_JZB/file/JZB_Zold_jelzaloglevel_jelentes_2021.pdf. Downloaded: 30 May 2022.
Paulik, É. – Tapaszti, A. (2022): The positive environmental impact of the MNB’s green bond portfolio increased significantly. Special article, Magyar Nemzeti Bank. https://www.mnb.hu/letoltes/eva-paulik-attila-tapaszti-the-positive-environmental-impact-of-the-mnb-s-green-bond-portfolio-increased-significantly.pdf. Downloaded: 11 May 2022.
Rentenbank (2021): Evaluation of greenhouse gas emissions avoided in the year 2021 attributable to the portfolio of wind energy and photovoltaic installations financed by Landwirtschaftliche Rentenbank. https://www.rentenbank.de/en/documents/Impact-Analysis-by-ZSW-March-2022.pdf. Downloaded: 13 April 2022.
TJ (2021): Takarék Jelzálogbank: Előzetes hatásvizsgálati jelentés (Preliminary Impact Assessment Report) https://www.takarekjzb.hu/files/22/84150.pdf. Downloaded: 25 October 2022.
Umweltbundesamt (2020): Emissionsbilanz erneuerbarer Energieträger, Bestimmung der vermiedenen Emissionen im Jahr 2020, 2020 Umweltbundesamt. https://www.umweltbundesamt.de/publikationen/emissionsbilanz-erneuerbarer-energietraeger-2020. Downloaded: 13 April 2022.
UN (2021): Financing Climate Action. https://www.un.org/en/climatechange/raising-ambition/climate-finance. Downloaded: 4 May 2022.
UNFCCC (2007): Climate-related risks and extreme events. https://unfccc.int/topics/resilience/resources/climate-related-risks-and-extreme-events. Downloaded: 7 September 2022.
UniCredit-J (2022): UniCredit Jelzálogbank: Zöld jelzáloglevél allokáció és környezeti hatáselemzés (Green Mortgage Bond Allocation and Environmental Impact Assessment). https://www.jelzalogbank.hu/system/fileserver.html?file=/202202/Zold_jelzalgolevel_allokacio_20220207.pdf&type=related. Downloaded: 30 May 2022.